[Federal Register Volume 63, Number 28 (Wednesday, February 11, 1998)]
[Notices]
[Pages 7019-7020]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3368]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39618; File No. SR-CBOE-98-01]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Chicago Board Options 
Exchange, Inc., Relating to Exchange Fees for Equity Options

February 4, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4\2\ thereunder, notice is hereby given that 
on January 16, 1998, the Chicago Board Options Exchange, Inc. 
(``CBOE''or ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the CBOE. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The CBOE is proposing to change its Order Book Official (``book'') 
rate schedule for equity options.
    The text of the proposed rule change is available at the Office of 
the Secretary, CBOE and at the Commission.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the CBOE included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The CBOE has prepared summaries, set forth in sections 
A, B and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, Proposed Rule Change

    The purpose of the proposed rule change is to change the book fee 
schedule applicable to equity options. The Exchange is not changing the 
book fees for index options at this time. The book fees are billed at 
the end of each month and so this change will be reflected in the bills 
for all January transactions. Although the change is being applied 
retroactively, the amount of time for which the change will be applied 
retroactively is minimal. It should be noted that the Exchange's 
Financial Planning Committee and the Floor Directors Committee endorsed 
this proposal and sent it to the Board for approval prior to the end of 
1997 and prior to the time by which the new change was to be applied. 
These fee changes are being implemented by the Exchange pursuant to 
CBOE Rule 2.22.
    Under the new schedule, equity option book execution services will 
be charged a flat rate of $0.45 per contract. The previous per contract 
rate schedule for equity options (and the current index option 
schedule) charged various rates for book executions depending on the 
premium and the order size, as follows:

------------------------------------------------------------------------
                                             First ten      Eleven and  
               Premium \3\                   contracts         above    
------------------------------------------------------------------------
Accommodation liquidations and cabinet                                  
 trades.................................          $0.10           $0.10 
Under \1/2\.............................           0.35            0.28 
\1/2\-1.................................           0.525           0.455
1-2.....................................           0.63            0.525
2-4.....................................           0.77            0.63 
4-8.....................................           1.05            0.91 
8-14....................................           1.40            1.05 
14-20...................................           1.75            1.295

[[Page 7020]]

                                                                        
20 and above............................           2.10            1.61 
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    As with the previous schedule, the charge for cabinet trades/
accommodation liquidations, as described in CBOE Rules 6.54 and 21.15, 
will continue to be $0.10 per contract. In addition, as in the previous 
schedule, no execution fee will be assessed market orders sent to the 
book prior to the opening and executed during opening rotation. The new 
fee schedule should reduce the overall Order Book Official fees (``book 
fees'') paid by all Exchange members. The Exchange believes that the 
reduction in the book fees will allow the Exchange to compete more 
effectively for transactions in equity options.
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    \3\ ``Premium'' equals the option price in dollars, calculated 
on a per-share basis for equity option contracts, and calculated on 
a per-unit basis for index option contracts. The ranges set forth 
include their lower bounds.
    For options on the Standard & Poor's 100 Stock Index (OEX), 
there is no charge for ``market'' and ``limit'' orders placed with 
the Order Book Official prior to the opening and executed during 
opening rotation. For other options, this rule applies to ``market 
orders'' but not ``limit orders.''
    Accommodation liquidations and cabinet trades are off-market 
trades at a price of $1 per option contract.
    The definitions were clarified during a telephone conversation 
between Timothy Thompson, Senior Attorney, CBOE, and Joshua Kans, 
Attorney, Division of Market Regulation, Commission, January 22, 
1998.
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    The Proposed rule change is consistent with Section 6 of the 
Act,\4\ in general, and furthers the objectives of Section 6(b)(4) of 
the Act \5\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
CBOE members.
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    \4\ 15 U.S.C. 78f.
    \5\ U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change establishes or changes a 
due, fee, or other charge imposed by the Exchange, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \6\ and 
subparagraph (e)(2) of rule 19b-4 \7\ thereunder. At any time within 60 
days of the filing of the proposed rule change, the Commission may 
summarily abrogate such rule change if it appears to the Commission 
that such action is necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
    \7\ 17 CFR 240.19b-4(e)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 450 Fifth Street, N.W., Washington, 
D.C. 20549. Copies of such filing will also be available for inspection 
and copying at the principal office of the CBOE. All submissions should 
refer to File No. SR-CBOE-98-01 and should be submitted by March 4, 
1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 98-3368 Filed 2-10-98; 8:45 am]
BILLING CODE 8010-01-M